Energy & Environment

Approximately $42 billion for energy and $20 billion for the environment

The Recovery Act provides for unprecedented government spending on renewable energy and energy efficiency with the aim of reducing greenhouse gas emissions and the country’s dependence on foreign oil while creating large numbers of green jobs. There are also substantial funds for improving the country’s drinking water infrastructure and accelerating the clean-up of hazardous waste sites.

The main energy provisions are the following:

Weatherization

$5 billion in formula grants to state governments for programs that improve the energy efficiency of homes occupied by low-income families.

Energy Efficiency and Conservation Block Grants

$2.8 billion in formula grants to state and local governments as well as Indian tribes for projects that reduce carbon emissions and lower energy usage. Another $400 million will be awarded on a competitive basis.

State Energy Programs

$3.1 billion in formula grants to state governments for projects that increase energy efficiency and reduce the use of imported fuels.

Grid Modernization

$4.5 billion to the Energy Department’s Office of Electricity Delivery and Energy Reliability for work on modernization of the electric delivery system, including the development of “smart grid” technologies. Of that total, $100 million is to be used for worker training. In addition, the Act provides $6 billion for a loan guarantee program to enable the mobilization of a much larger pool of private capital for transmission grid construction compatible with renewable energy generation.

Advanced Batteries

$2 billion for the Department of Energy to use in making discretionary grants to facilities that produce advanced batteries, especially those using lithium ion technology.

Clean Energy R&D

$2.5 billion for applied research, development, demonstration and deployment activities at the Energy Department’s Office of Energy Efficiency and Renewable Energy. Of this total, $800 million is designated for biomass energy projects and $400 million for geothermal projects.

Fossil Energy R&D

$3.4 billion for the Energy Department’s Fossil Energy R&D program, of which a significant portion is expected to be used for competitive grants relating to industrial carbon capture projects.

Alternative-Fueled Vehicles

$300 million for grants to states, localities and transit agencies for the purchase of alternative-fuel and advanced-technology vehicles.

Other Energy Spending

In addition to the total of $36 billion appropriated to the Department of Energy in the programs above and some smaller ones, the Act provides $6 billion more for federal energy projects, of which the largest part is $4.8 billion for the General Services Administration to use to improve the energy efficiency of federal buildings through the High-Performance Green Building program.

Energy Tax Expenditures

The tax part of the Recovery Act includes $21.6 billion in tax expenditures, the largest portion of which is $13.1 billion tied to the Renewable Energy Electricity Tax Credit.

The main environmental provisions are the following:

Clean Water/Drinking Water Revolving Funds

$4 billion in Clean Water State Revolving Fund capitalization grants and $2 billion in Drinking Water State Revolving Fund capitalization grants through the Environmental Protection Agency. The federal funds are combined with 20-percent state matching funds to provide loans to local communities for wastewater and drinking water infrastructure projects.

Rural water projects

$1.4 billion (about two-thirds grants and one-third loans) for drinking water and wastewater projects in communities of 10,000 people or less.

Corps of Engineers

$4.6 billion for activities of the Army Corps of Engineers relating to waterway navigation, flood control, coastal protection, etc.

Hazardous Waste Sites

$600 million to the Environmental Protection Agency for discretionary funding of Hazardous Substance Superfund clean-up projects. Another $200 million is devoted to formula grants for the clean-up of leaking underground storage tanks.

Brownfields

$100 million in competitive grants for projects involving the reclamation of contaminated former industrial sites.

Diesel Emissions

$300 million for diesel emission reduction grants to state and local governments as well as non-profit organizations.

Defense Cleanup

Policy Issues

The $5 billion weatherization appropriation came under criticismfrom taxpayer watchdog groups such as Citizens Against Government Waste, which expressed skepticism that states can spend so much money quickly in an efficient way. But officials in states such as Wisconsin that already had significant weatherization programs expressed confidence that they could make effective use of the big influx of new federal money. Stateline reported in May that some states were considering moving away from the customary approach of letting community action agencies control weatherization programs.

The $4.5 billion appropriated for electric grid modernization (plus billions more for related loan guarantees) has generated concern among consumer groups that the new system could end up giving utilities too much control over the rates they charge.

The lion's share of the energy money in the Recovery Act is designed to promote renewable resources and energy efficiency. Perhaps the most controversial part of this section of ARRA is the relatively small amount--$3.4 billion--devoted to Fossil Energy R&D. It was clear from the start that a large chunk of this money would go to projects seeking to find ways to capture the greenhouse gases given off from the burning of coal. Many environmentalists are skeptical that "clean coal" can ever be achieved. In mid-May Energy Secretary Steven Chu announced that $2.4 billion of the fossil energy appropriation would indeed be used "to expand and accelerate the commercial deployment of carbon capture and storage (CCS) technology." On June 12 Secretary Chu announced that $1 billion will go to the controversial FutureGen coal project that was abandoned by the Bush Administration.

Another kind of controversy has arisen with regard to the $2 billion devoted to work on advanced batteries for electric vehicles. Several states are competing for these funds, in part by offering substantial state tax breaks and other subsidies to projects planning to operate within their borders. For example, Kentucky put together a $200 million subsidy package for an industry consortium called the National Alliance for Advanced Transportation Battery Cell Manufacture. If states give up large sums of tax revenues in this competition, it undermines the ARRA goal of stabilizing state fiscal conditions.

In May Gov. Sarah Plain announced that Alaska would reject $28.6 million in State Energy Program funds because she fears that accepting the money would force state municipalities to adopt building codes in order to achieve energy efficiency goals.

U.S. Department of Energy Office of Inspector General, The Department of Energy's Acquisition Workforce and its Impact on Implementation of the American Recovery and Reinvestment Act of 2009, March 2009; online here.

U.S. Department of Energy Office of Inspector General, The American Recovery and Reinvestment Act at the Department of Energy, Report OAS-RA-09-01, March 2009; online here.

Center for Public Policy Priorities, It's Getting Hot in Here: Texas Weatherization Assistance Program Provides Relief to Low-Income Families and Creates Jobs for the New Economy, July 30, 2009; online here.